DECIPHERING DETERMINANTS OF EXPORT SOPHISTICATION: INSIGHTS FROM A PANEL ANALYSIS OF EMERGING ECONOMIES (BRICS) AND PAKISTAN

Abstract

The present study aims at highlighting the determinants of export sophistication is Brazil, Russia, India, China, South Africa (BRICS) and Pakistan. Empirical analysis is done on panel data of BRICS and Pakistan for the years 1996 to 2022.For empirical analysis Generalized Method of Moment (GMM) is used. Hausman test is used to suggest the fixed effect or random effect model. Results revealed on the basis of selected determinants. Results of term of trade, official exchange rate, political stability, globalization and capital formation exhibited positive and insignificant in case of BRICS and Pakistan. The term insignificant does not mean that these variables do not affect the export sophistication. It means that these positively associated determinants can play a key role in order to boost up the export sophistication in case of BRICS and Pakistan. While GDP per capita shows negative which is quite debatable. It means that those countries which have a negative fiscal and trade balance do not benefit from the sophistication of exports. Before entering export sophistication these countries need to be financially stable in case of trade by promoting exportable goods.